It’s no secret that adoption of SaaS solutions continues to grow – not just among small and mid-sized firms, but within large enterprises as well. More and more companies of all types and sizes are realizing the many dramatic benefits SaaS has to offer – including accelerated deployment, minimized maintenance requirements, simplified upgrades, improved usability, and lower total cost of ownership.
Now, the experts are confirming what we already knew – that the use of SaaS continues to rise sharply – in a slew of new industry studies.
A new Gartner study titled “Software as a Service 2009 – 2014” claims that revenues from SaaS-based enterprise software will reach $8.5 billion this year, up an impressive 14.1 percent from last year. In the report, Gartner also predicts that, by the end of 2014, SaaS will account for as much as 16 percent of the total enterprise software market, as companies continue to embark on aggressive cost-cutting measures due to the poor economy.
Other key findings of the study include:
- SaaS revenues, as a percentage of the overall enterprise software market, will grow close to 60 percent this year.
- The compound annual growth rate (CAGR) for SaaS is expected to be approximately 15.3 percent through 2014, while expansion in the enterprise software market as a whole is expected to reach just 5.3 percent.
- SaaS adoption varies greatly from market to market.
IDC Weighs In
IDC is also backing up Gartner’s predictions, with a new study (Worldwide Software as a Service 2010 – 2014 Forecast: Software Will Never Be the Same) that forecasts compound annual growth of more than 25 percent, with SaaS revenues reaching an astonishing $40.5 billion by 2014. The renowned analyst firm also anticipates that, in the next several years, the majority of new software vendors – 85 percent – will structure their solutions around a SaaS delivery model. As a result, they expect worldwide revenues from traditional on-premise applications to drop by nearly $7 billion dollars.
Their research also demonstrates that:
- SaaS applications will account for half of all SaaS revenues by 2014, with infrastructure and implementation making up the rest.
- The key drivers of increased SaaS adoption include the need to tighten budgets due to poor financial conditions, the need for enhanced collaboration among distributed workforces, the desire to innovate to satisfy the needs of younger and more tech-savvy staff members, and the increasing number of mobile employees.
- Within the next four years, as much as 65 percent of new products offered by established ISVs will be SaaS-based.
- By 2014, revenue from SaaS solutions will make up a full quarter of new growth in the software market.
What does this all mean? It clearly demonstrates that businesses are increasingly focused on deriving as much value as possible from their technology investments. And, there is no better way to maximize return then to choose solutions that are SaaS-based.